Tax refund woes bite exporters
Non-payment of tax refunds and last-mile procedural glitches have continued to be the biggest bane of exporters in the new tax regime. The issues have shaved off higher growth prospects for outbound trade. A sharp rebound in exports in November, though, might present another picture. But experts attributed this to other factors such as rising commodity prices and a low base effect.
Exporters said a staggering ~50,000 crore worth of tax refunds were yet to be released by the Centre and state governments, leading to a severe crunch in working capital for traders. The smalland medium-scale segments have been hit the most.
Disruptions caused by the GST have been flagged by CRISIL as a major reason behind the export growth slowdown in the midterm, as a relatively stable rupee and improving global growth had made the time ripe for exports to rise.
Earlier this month, the finance ministry said for the first four months after the GST was announced, till October, exporters filed claims for ~6,500 crore through shipping bills. On the other hand, a senior finance ministry official pointed out that the claims were not being filed using the apt forms and matching shipping bills.
However, this figure has been contested by the Federation of Indian Exports Organisations (FIEO), which said the demand for input tax credit (ITC), forming a chunk of GST refunds, hasn't been factored in. “Exporters are absolutely in the dark about their pending claim. The response given by the Customs authorities is also very limited. It is, therefore, essential that a facility to view the status of refund may be provided so that exporters are aware of the stage of refund and deficiency, if any,” FIEO President Ganesh Kumar Gupta said. The FIEO suggested exemptions be provided from IGST on all instruments providing basic Customs duty-free imports of inputs and capital goods.
The slow rate of tax refunds was resulting in exporters asking for a re-credit, T S Bhasin, chairman of the Engineering Exports Promotion Council, said. But in the process, precious time was being lost. For instance, the re-credit for July would be paid along with the claims for August; thus the refunds would keep on accumulating, Bhasin added.